You and your former spouse were able to settle your family law issues without having to resort to litigation and you signed a written agreement that contains your settlement terms. But your ex is refusing to follow the agreement. Now what?
I recently acted as co-counsel on a court application relating to a mediated settlement that the opposing party was refusing to fully implement. Madam Justice Warren’s judgment is reported at Carlton v. Carlton, 2017 BCSC 603. It gives a very helpful overview of the process for seeking court orders requiring a party (in this case, Ms. Carlton) to follow through on a settlement agreement.
Three Questions for The Court
Justice Warren held that a party to a court action can bring a simple application for the enforcement of an agreement to settle that action. On an application of this kind, the court should consider three questions:
- Did the parties enter a binding settlement agreement?
- If so, does the court have discretion to refuse to enforce that agreement?
- If the court does have that discretion, how should it be exercised in this case?
In the Carlton case, the court found that there clearly was a binding settlement agreement. There was an offer and acceptance of its terms, and those terms were clear and unambiguous. In fact, Ms. Carlton did not argue otherwise.
Regarding the second question, Justice Warren found that because the settlement was not yet fully implemented, the court did still have a limited discretion to refuse to enforce the agreement. However, she could not do so simply on the basis that the agreement was unfair; rather, there are only four grounds on which a court may refuse to enforce an agreement:
- The lawyer did not actually have instructions to enter the settlement, and the other party knew that.
- The lawyer misunderstood the client’s instructions, or misunderstood the background facts in a way that would result in injustice, or would make it unreasonable or unfair to enforce the settlement.
- There was fraud or collusion.There was a genuine question, which would require a full trial to resolve, about any of these three issues.
Justice Warren found that none of these applied in Carlton. Among other things, she noted that Ms. Carlton had been present during the negotiations, and had both signed the agreement at the end and initialed each of its pages.
When to Exercise That Discretion
Regarding the third question, Justice Warren found that, while she did not have discretion to refuse to enforce the agreement in this case, she did have discretion as to whether it should be enforced on a simple application like the one before her, or whether a full trial might be required. She held that the question to ask in this regard was whether, under contract law, there was any question as to the validity of the agreement. The applicable contract law principles are:
- lack of capacity to make the contract, or
- a mistake by both parties about the underlying facts.
None of those were present in the Carlton case. Justice Warren noted, for example, that Ms. Carlton suggested there was duress because the agreement was not completed until 10:30 pm, and that it was very hot in the office where it was signed. However, there was nothing stopping her from simply walking out of the office if she did not wish to enter the agreement.
As a result of this reasoning, Justice Warren ultimately made orders against Ms. Carlton relating to implementation of the settlement, and Mr. Carlton was awarded costs.
The Carlton application was argued in less than one full day in court. The takeaway, then, is that the law in BC is well-equipped to deal with parties who try to renege on settlement agreements in family matters. In many cases, it is not necessary to start a new court proceeding, change the original pleadings, or anything else adding complexity. So if the other party to your settlement is not following through, don’t be quick to give up on it.